Founder of digital currency Liberty Reserve extradited to the US

Authorities have extradited the founder of Liberty Reserve, a virtual currency allegedly used by cybercriminals for money laundering, from Spain to the U.S.

Arthur Budovsky, 40, a citizen of Costa Rica, arrived in the U.S. on Friday, the U.S. Department of Justice said. Budovsky was arrested in Spain in May 2013 after a grand jury in a federal court in New York City indicted him on charges related to money laundering.

Budovsky is scheduled to appear before a judge Saturday, with an arraignment scheduled for next Tuesday, the DOJ said in a press release.

The DOJ has accused Budovsky, a former U.S. resident, of allowing criminals "to process illegal payments and to launder billions of dollars in crime proceeds," Assistant Attorney General Leslie Caldwell of the DOJ's Criminal Division, said in a statement.

Budovsky founded Liberty Reserve after running a third-party exchange service called Gold Age for the digital currency E-Gold, the DOJ said. Budovksy was convicted in New York state of operating Gold Age as an unlicensed money-transmitting business in the mid-2000s, the agency said.

Budovsky then began creating a new digital currency. He launched Liberty Reserve in Costa Rica in 2006.

Liberty Reserve billed itself as the Internet's "largest payment processor and money transfer system," and the DOJ alleged that Budovsky structured it in a way that helped users conduct illegal transactions anonymously and launder the proceeds. Budovsky sought out criminals as customers while seeking to evade the reach of U.S. law enforcement, the DOJ alleged.

Before the U.S. government shut it down in May 2013, Liberty Reserve had more than 1 million users, including more than 200,000 users in the U.S., the DOJ said. The service processed about 55 million transactions totalling US$6 billion, the agency said.

Some of the transactions allegedly involved funds obtained through credit card fraud, computer hacking, narcotics trafficking and other crimes, the DOJ said.

Budovsky is among seven individuals charged in the indictment, which was unsealed in May 2013. Four co-defendants have pleaded guilty to charges and await sentencing in the court in New York. Charges are pending against Liberty Reserve and two individual defendants who have not been arrested.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

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